Gold Fields Limited: 2005 -- Q3 F2005 Results -- Unaudited -
Quarter Ended 31 March 2005 - JOHANNESBURG, South Africa, April 28
/PRNewswire-FirstCall/ -- Gold Fields Limited (NYSE & JSE: GFI)
today announced March 2005 quarter net earnings excluding gains and
losses on financial instruments and foreign debt and exceptional
items of R128 million up 28 per cent, compared with R100 million in
the December 2004 quarter. In US dollar terms the March 2005
quarter equivalent was US$21 million compared with US$16 million in
the December 2004 quarter. March 2005 quarter salient features: *
Attributable gold production increased 4 per cent to 1.09 million
ounces quarter on quarter, in line with the previous guidance. The
increase at the international operations was 17 per cent; * Costs
were again well controlled, with total cash costs flat at R64,957
per kilogram (US$340 per ounce); * Operating profit of R537 million
(US$90 million) was achieved for the March quarter; * Normalised
earnings up 28 per cent to R128 million; * Gold Fields continued
its vigorous defence against Harmony's hostile and ill conceived
take-over attempt. Ian Cockerill, Chief Executive Officer of Gold
Fields said: "This is a challenging time for the South African gold
mining industry and I am delighted with the way all of our
employees have responded magnificently to the twin challenges of
the difficult operating environment and the continuing saga of the
hostile Harmony offer. I am pleased to report that the Gold Fields
team around the world has once again delivered in line with its
promises, with a strong operational performance across the Group. A
creditable 4 per cent increase in total attributable gold
production was mostly offset by the lower rand gold price received
during the quarter, resulting in a marginal increase in revenue.
Rand per kilogram costs were well contained with Group costs flat
at R64,957 per kilogram and net earnings, excluding gains and
losses on financial instruments and foreign debt and exceptional
items, increasing by 28 per cent quarter on quarter. The Group's
ongoing focus on inward investment has paid dividends, as
international production has increased by 17 per cent with the
completion of the growth projects at St Ives and Tarkwa. Further
benefits are expected at these operations as internal efficiencies
are maximised and costs reduced. The South African operations
delivered a robust performance despite the Christmas break and the
traditional slow start up. Planning and scheduling was optimised at
these operations in order to minimize production disruptions during
this period. This optimised planning lead to gold production at the
South African operations for the quarter ended March 2005 being 2
per cent higher than the corresponding period in the previous year.
For the group as a whole, attributable gold produced was over 5 per
cent higher than the corresponding period in the prior year with
unit costs 4 per cent lower. The benefits of Project 100 and
Project Beyond continue to be realized as South African unit
operating costs again decreased quarter on quarter, the third in a
row. Gold Fields is firmly on track to meet its stated rand cost
per kilogram target of R70,000 for the South African operations and
this target was in fact exceeded in the March month. The results
announced today are another clear demonstration of the true value
of Gold Fields and management's ability to deliver in difficult
times. We will continue to focus on operational excellence, which
we believe will result in another strong performance in the next
quarter despite continuing tough economic conditions." Stock data
JSE Securities Exchange South Africa-(GFI) Number of shares in
issue Range - Quarter ZAR66.02 - ZAR81.41 - at end March
492,294,226 Average Volume - 748,300 2005 Quarter shares/day -
average for 492,144,121 NYSE - (GFI) the quarter Free Float 100%
Range - Quarter US$10.75 - US$13.35 ADR Ratio 1:1 Average Volume -
904,600 Quarter shares/day Bloomberg / GFISJ / GFLJ.J Reuters
Salient features SA Rand Nine months to Quarter March March March
Dec March 2004 2005 2004 2004 2005 Gold produced* kg 96,910 97,761
32,131 32,599 33,845 Total cash costs R/kg 67,360 65,443 67,528
64,921 64,957 Tons milled 000 34,952 35,655 11,815 11,823 12,789
Revenue R/kg 86,630 82,885 88,887 84,872 81,952 Operating costs
R/ton 202 197 199 198 184 Operating profit Rm 1,770 1,630 656 637
537 Operating margin % 20 19 22 22 18 Net earnings Rm 953 194 255
80 11 Net earnings SA c.p.s. 197 39 51 16 2 Headline earnings Rm
634 157 221 45 9 Headline earnings SA c.p.s. 131 32 45 9 2 Net
earnings Rm 485 222 238 100 128 excluding gains and losses on
financial instruments and foreign debt net of cash and exceptional
items Net earnings SA c.p.s. 100 45 48 20 26 excluding gains and
losses on financial instruments and foreign debt net of cash and
exceptional items * Attributable -- All companies wholly owned
except for Ghana (71.1%). Salient features US Dollars Nine months
to Quarter March March March Dec March 2005 2004 2005 2004 2004
Gold produced* (000)oz 3,143 3,116 1,088 1,048 1,033 Total cash
costs $/oz 332 299 340 330 309 Tons milled 000 35,655 34,952 12,789
11,823 11,815 Revenue $/oz 420 385 428 431 407 Operating costs
$/ton 32 29 31 32 29 Operating profit $m 266 253 90 104 96
Operating margin % 19 20 18 22 22 Net earnings $m 32 136 2 13 38
Net earnings US c.p.s. 6 28 - 3 7 Headline earnings $m 26 91 2 8 33
Headline earnings US c.p.s. 5 19 - 2 7 Net earnings $m 36 69 21 16
34 excluding gains and losses on financial instruments and foreign
debt net of cash and exceptional items Net earnings US c.p.s. 7 14
4 3 7 excluding gains and losses on financial instruments and
foreign debt net of cash and exceptional items * Attributable --
All companies wholly owned except for Ghana (71.1%). Health and
Safety We regret the 5 fatalities which occurred during the March
quarter, however, the fatal injury frequency rate reduced from 0.16
to 0.14. The lost day injury frequency rate improved from 13.2 to
12.2, and the serious injury frequency rate improved from 6.1 to an
all time low of 5.8. Beatrix continued its sterling performance by
achieving 3 million fatality free shifts for the whole mine during
the March quarter. Beatrix North excelled as well, managing to
achieve 1.5 million fatality free shifts during this quarter.
Financial Review Quarter ended 31 March 2005 compared with quarter
ended 31 December 2004 Revenue Attributable gold production
increased by 4 per cent to 1,088,000 ounces in the March 2005
quarter as forecast in December, compared to 1,048,000 ounces
achieved in the December 2004 quarter. Production at the South
African operations was 711,000 ounces, which was 2 per cent lower
than the previous quarter. The international operations increased
17 per cent to 377,000 ounces. Performance at the South African
operations was similar to the forecast given in the December
quarterlies at Driefontein and Beatrix but at Kloof an underground
fire during the quarter at 2 sub-vertical shaft and the closure of
number 3 surface treatment plant, resulted in lower than forecast
production. The increase at the international operations was mainly
due to a 45 per cent increase at St Ives, as the old and new mill
operated in parallel for the whole quarter, and due to the full
benefit being realised of the new Tarkwa mill in the March quarter.
The old mill at St Ives operated throughout the quarter to utilise
the available stockpile built up over the previous quarters and as
a back up for the new mill as production increased towards design
capacity. The slightly lower US dollar gold price achieved for the
March quarter (US$428 per ounce, compared with US$431 per ounce in
the December quarter) plus the strengthening of the rand against
the US dollar, from an average of R6.12 to R5.95, resulted in the
rand gold price decreasing 3 per cent, from R84,872 per kilogram in
the December quarter to R81,952 per kilogram in the March quarter.
The higher production was largely offset by the lower rand gold
price achieved, resulting in revenue increasing marginally, from
R2,946 million (US$480 million) to R2,950 million (US$495 million)
this quarter. Operating costs Operating costs for the March
quarter, at R2,351 million (US$395 million), were virtually
unchanged when compared with the December quarter's R2,341 million
(US$382 million). This was despite the increase in production.
Costs at the South African operations were R1,649 million (US$277
million), which was 2 per cent lower than operating costs in the
previous quarter of R1,688 million (US$275 million). This is
further evidence of the savings achieved from various cost
initiatives implemented over the last few quarters, as costs at the
South African operations do not vary significantly with production
levels as a high proportion of these costs are fixed. At the
international operations, costs were R702 million (US$118 million),
7 per cent higher than the R654 million (US$107 million) reported
in the December quarter. The increase in costs was mainly due to
the 17 per cent increase in production. The net gold inventory
release for the March quarter amounted to R62 million (US$10
million) compared with a credit of R33 million (US$6 million) the
previous quarter. The release of gold-in-process was mainly at St
Ives to feed both the new mill and the old mill. At Damang, there
was also a release from stockpile due to the reduction of mining
from the Damang pit as forecast last quarter, being replaced with
low grade stockpile material. Operating profit margin The net
effect of the movements in revenue and costs, after taking into
account the release of gold-in-process, was an operating profit of
R537 million (US$90 million). This is 16 per cent lower than the
R637 million (US$104 million) achieved in the December quarter. The
Group margin decreased from 22 per cent last quarter to 18 per cent
in the March quarter and the margin at the South African operations
decreased from 12 per cent to 9 per cent. The margin at the
international operations at 33 per cent compares to 40 per cent in
the previous quarter. Amortisation Amortisation of R371 million
(US$62 million) for the March quarter is virtually unchanged when
compared with the December quarter's R379 million (US$62 million).
Amortisation at the South African operations decreased by R4
million, mainly due to the decrease in production at Kloof. Other
income Net interest and investment income after taking account of
interest paid increased from R16 million (US$3 million) in the
December quarter to R34 million (US$6 million) for the March
quarter. This increase in net interest is due to gains on the
interest rate swap previously deferred and credited to the Mvela
loan of R17 million now included in earnings following the half
yearly interest payment to Mvela. Gains on foreign debt and cash
which amounted to R5 million (US$1 million) in the December
quarter, are now nil. Previous gains were due to exchange gains on
approximately euro164 million held offshore, arising from an
international private placement undertaken in November 2003. Now
that these funds are held in US dollar, in an offshore subsidiary
whose reporting currency is also US dollar, any exchange
differences are accounted for in equity. The loss on financial
instruments of R55 million (US$8 million) compares to a gain of
R147 million (US$24 million) in the December quarter. Included for
the quarter is a marked to market loss on the Mvela interest rate
swap of R73 million (US$12 million), partially offset by a gain on
the Tarkwa rand/US dollar forward cover of R12 million (US$2
million) and a R6 million (US$1 million) gain on the Australian
dollar/US dollar call options. The interest rate swap was
established in relation to the loan from Mvela Gold and converted a
fixed interest rate exposure to a floating rate. This instrument
was established as short-term rates were significantly lower than
long-term rates and the resultant upward sloping yield curve was
expected to prevail for some time. This strategy is yielding
positive results as the marked to market value of the swap at the
end of March 2005 was a positive R164 million. Of this, R133
million was accounted for in the income statement and the balance
of R31 million has been hedge accounted and credited to that
portion of the loan that is regarded as debt for accounting
purposes. The positive marked to market value on the interest rate
swap at March of R164 million, compares with a positive marked to
market value at the end of December 2004 of R259 million. R73
million of this reduction was accounted for in earnings as referred
to above with the balance of the reduction of R22 million debited
to the Mvela loan as this element of the interest rate swap is
hedge accounted. This amount is included in earnings on a pro-rata
basis as the loan is repaid. In addition, the accrued benefit of
the interest rate swap for the March quarter was R22 million which
will be realised in cash at the date of the next half yearly
interest payment to Mvela. Year to date benefit from the interest
rate swap amounts to R76 million. A further benefit of R21 million
has been locked in for the three-month period to June 2005. More
details on these financial instruments are given on page 15 of this
report. Exploration expenditure increased from R39 million (US$7
million) to R43 million (US$7 million) in the March quarter --
please refer the Exploration and Corporate Development section. The
exceptional loss this quarter of R86 million (US$14 million) was
primarily as a result of the cost of defending against the Harmony
hostile bid. Costs for the hostile bid include those billed to the
end of March 2005 plus an estimate of costs not yet billed.
Taxation A taxation credit of R57 million (US$9 million) in the
March quarter compares with a charge of R135 million (US$22
million) in the December quarter. This decrease is due to the lower
operating profit and a deferred tax credit at Tarkwa of R65 million
(US$11 million) and a credit at Damang of R6 million (US$1 million)
as a result of a decrease in the tax rate in Ghana from 32.5 per
cent to 28 per cent. Earnings After accounting for minority
interests, earnings amounted to R11 million (US$2 million) or 2 SA
cents per share (US$0.00 per share), compared with R80 million
(US$13 million) or 16 SA cents per share (US$0.03 per share) in the
previous quarter. Headline earnings i.e. earnings less the after
tax effect of asset sales, impairments and the sale of investments,
amounted to R9 million (US$2 million) or 2 SA cents per share
(US$0.00 per share) compared with R45 million (US$8 million) or 9
SA cents per share (US$0.02 per share) last quarter. Earnings,
excluding exceptional items as well as net gains and losses on
financial instruments and foreign debt net of cash amounted to R128
million (US$21 million) or 26 SA cents per share (US$0.04 per
share) compared with R100 million (US$16 million) or 20 SA cent per
share (US$0.03 per share) reported last quarter. Cash flow Cash
flow from operating activities for the quarter was R653 million
(US$106 million), compared with operating cash flow in the December
quarter of R233 million (US$40 million). The increase in cash flow
reflects a net positive change in working capital of R428 million
(US$69 million) due to account payments (including salaries) paid
early last quarter due to the Christmas break. Dividends paid
during the quarter amounted to R148 million (US$25 million). No
dividends were paid last quarter. Capital expenditure amounted to
R440 million (US$75 million) compared with R528 million (US$87
million) in the December quarter. The decrease is mainly due to a
reduction in expenditure on the expansion projects at St Ives and
Tarkwa as they were commissioned in the December 2004 quarter.
Expenditure at the South African operations was marginally lower at
R150 million (US$25 million). A significant portion of this
expenditure was directed at the major projects, with R32 million at
1 tertiary and 5 shaft at Driefontein, R34 million at Kloof 4 shaft
and R31 million at Beatrix 3 shaft. The Australian operations
incurred capital expenditure of R151 million (A$32 million). The
mill project at St Ives accounted for R7 million (A$2 million) of
this expenditure as compared with R60 million (A$13 million) in the
December quarter. Expenditure on the St Ives mill project should be
completed during the June quarter with similar levels of
expenditure as were incurred in the March quarter. Other major
expenditure at St Ives was for development at Argo underground and
Mars open pit; A$3 million at each project for the quarter. At
Agnew R45 million (A$10 million) was spent on the Songvang open pit
project. At the Ghanaian operations, capital expenditure amounted
to R77 million (US$13 million). R12 million (US$2 million) was
spent on the new mill and on the project to convert from contract
mining to owner mining at Tarkwa. This compares with R78 million
(US$13 million) in the previous quarter. Expenditure on these
projects has now been finalised. Major projects are still forecast
to be in line with approved votes. Purchase of investments amounted
to R130 million (US$21 million). All of this was for the
acquisition of a 19.8 per cent interest in Comaplex Minerals Corp.
A R133 million (US$22 million) Mvela loan repayment was made during
the quarter. Net cash outflow for the quarter was R214 million
(US$40 million). After accounting for a positive translation
adjustment for the quarter of R168 million (negative US$8 million)
the cash balance at the end of the March quarter was R2,931 million
(US$474 million), which has declined marginally from R2,978 million
(US$522 million) at the end of December. Detailed and Operational
Review Group overview Attributable gold production for the March
2005 quarter increased 4 per cent to 1,088,000 ounces when compared
with the December quarter. Production from the South African
operations at 711,000 ounces accounted for 65 per cent of the
Group's total attributable production, compared with 726,000 ounces
or 69 per cent last quarter. At the South African operations, gold
production decreased 2 per cent compared with the previous quarter.
At Kloof, the decrease of 16,200 ounces was partly due to a fire at
2 sub-vertical shaft. At Beatrix, production decreased 4,100 ounces
mainly due to the curtailment of loss making production,
particularly at Beatrix 2 shaft (Beatrix South), where grades
experienced at sections of this shaft are not economic at current
rand gold prices. Affected crews are being redeployed to other
parts of the mine (particularly Beatrix 4 shaft) and will help to
replace the lost production over the next quarter at 2 shaft, as
well as the lost production due to the stoppage of surface dump
treatment at Beatrix number 2 plant. The declines at Kloof and
Beatrix were partially offset by an increase at Driefontein of
5,800 ounces due to higher underground yields experienced at 5
shaft and on the west side of the mine. Operating profit at the
South African operations decreased from R224 million (US$36
million) to R166 million (US$28 million), as a consequence of the
lower rand gold price and the marginally lower gold production.
Production from the Australian operations increased 33 per cent to
206,900 ounces due to operating both the old and new mills at St
Ives for the duration of the quarter, and increased production from
the Songvang open pit at Agnew. Operating profit from the
Australian operations increased quarter on quarter in rand terms
from R108 million (A$23 million, US$18 million) to R120 million
(A$26 million, US$20 million), primarily as a result of increased
production. The Ghanaian operations showed a 2 per cent increase in
attributable gold production to 169,900 ounces. Tarkwa increased
gold production by 10 per cent due to the first full quarter of
production from the new mill at Tarkwa. Damang's production was 19
per cent lower due to a planned reduction in high grade ore volumes
from the Damang pit. Ghana contributed operating profit of R251
million (US$42 million). The international operations contributed
R371 million (US$62 million) or 69 per cent of the total operating
profit of R537 million (US$90 million). This compares with R413
million (US$67 million) or 65 per cent of the total operating
profit of R637 million (US$104 million) last quarter. Group ore
processed increased from 11.82 million tons to 12.79 million tons
and overall yields were maintained at 2.9 grams per ton. As
forecast, total cash costs in rand terms were virtually unchanged
at R64,957 per kilogram, compared with R64,921 per kilogram in the
December quarter. In US dollar terms, total cash costs increased 3
per cent to US$340 per ounce, compared with US$330 per ounce last
quarter. This was due to the stronger rand. Operating cost per ton
at R184 was 7 per cent below last quarter due to the increase in
the surface tons at a lower average cost. South African operations
During the September 2003 quarter management took a view that the
South African currency would remain stronger for longer. As a
result it was decided to reposition the South African operations.
As previously reported this was presented as reverting from the
"Wal-Mart" strategy (more volume at lower grade) to the "SAKS 5th
Avenue" strategy (less volume at grades more in line with Life of
Mine ore reserve values). To support this switch in strategy in
September 2003, management introduced an initiative called Project
500, which, in turn, was split into two sub-projects called:
Project 100 and Project 400. Project 100 targets reduced
consumption of stoping, development and engineering materials, via
improved benchmarks and standards at the South African operations.
To December 2004, savings for the first half of the year amounted
to R70 million. In the March quarter additional savings of R29
million were achieved at Driefontein, Kloof and Beatrix of R14
million, R10 million and R5 million respectively. Projected annual
saving are estimated to be in the region of R140 million for the
year, which is well above the R100 million first targeted. Savings
were mainly achieved on explosives, underground support, drill
steel and logistics i.e. underground and surface engineering.
Project Beyond is a procurement initiative targeting savings of up
to 10 per cent on materials, services and capital expenditure in
South Africa on which around R3 billion per annum is expended. The
first phase of the project addresses spend of R1.1 billion in three
distinct blocks. The first block, completed in December 2004,
achieved contractual savings of R41 million from a spend of R345
million. These savings, on items such as grinding media, lubricants
and transport, will be realised over the next 12 months as the new
contract arrangements come into force. Work on the second block of
commodities, including explosives, electric cable, engineering
repairs and underground services, amounting to around R370 million,
is almost complete. Savings are expected to exceed target levels of
R37 million. The third and final block of phase one of the project,
scheduled for the fourth quarter of F2005, will address expenditure
of around R440 million, and savings will come from areas which
include roof support, diesel engine and pump repairs, electric
motors and drilling services. It is noteworthy that, despite the
achievement of major contractual savings in procurement,
expenditure with BEE companies has increased to over 30 per cent
during the quarter. The scope of Project Beyond is being extended
to include the Australian and Ghanaian operations, as well as the
Peruvian project. Indications are that savings of more than US$20
million per annum may be achieved, some of which will arise from
the aggregation of spend across the four (S.A., Ghana, Australia
and Peru) geographies. Project 400 aims to increase revenue such
that an additional R400 million is generated per annum. The aim is
to improve the quality and quantity of our outputs by replacing
surface tonnage to the plant with increased tonnage from
underground and ensuring output of a better quality. With reference
to the mine commentaries below, this is being implemented across
all operations and together with the introduction of productivity
initiatives reflects the increase in production year on year by
some 2 per cent at lower costs, despite a significantly lower gold
price. In order to maintain and increase this production profile
going forward it is imperative that the operations continue to
focus on development in order to provide the mining flexibility
required to continually improve stoping availability. At
Driefontein development continued above 6.7 kilometres for the
quarter, while on-reef development increased from 0.7 kilometres to
1.1 kilometres. VCR values have improved from 1,152 cm.g/t to 3,851
cm.g/t and the Carbon Leader reef development, the main contributor
of ore at Driefontein, increased in value by 32 per cent to 2,179
cm.g/t -- please refer to Development results on page 22 for more
detail. At Kloof, metres advanced were marginally down due to the
fire, but still at acceptable levels -- close to 8 kilometres for
the quarter. On-reef metres at Kloof increased marginally to 1.6
kilometres. Again an increase in values was seen as the VCR values
increased from 1,921 cm.g/t to 3,259 cm.g/t; VCR being the primary
ore zone at Kloof. At Beatrix, development advanced and on-reef
metres were maintained quarter on quarter at 9.5 kilometres and 1.9
kilometres respectively, while values improved at West (previously
4 shaft) by some 20 per cent. Development levels being achieved at
the South African operations are such that flexibility is expected
to improve in the quarters to come. Driefontein March 2005 December
2004 Gold produced - 000'ozs 293.5 287.7 Yield - underground - g/t
8.9 8.1 - combined - g/t 5.2 5.4 Total cash costs - R/kg 64,520
67,114 - US$/oz 337 341 Gold production at Driefontein increased by
2 per cent from 287,700 ounces to 293,500 ounces in the March
quarter. Underground tonnage decreased by 38,000 tons to 914,000
tons largely due to the Christmas break. This was replaced by an
increase in low grade surface tonnage from 695,000 tons to 846,000
tons. Total tonnage increased by 113,000 or 7 per cent quarter on
quarter. The increased tonnage, being low grade, reduced the
combined grade from 5.4 grams per ton in the December quarter to
5.2 grams per ton in the March quarter. The underground grade
increased from 8.1 to 8.9 grams per ton for the quarter. This was
on the back of higher grades than expected from the West section of
the mine at 7 and 8 shafts, but should decline in the June quarter
to around 8.5 grams per ton in line with the stoping areas and mix
currently being mined. Operating costs decreased 2 per cent from
R625 million (US$102 million) to R614 million (US$103 million) as a
result of the ongoing cost initiatives. Total cash costs reduced by
4 per cent in rand terms to R64,520 per kilogram quarter on
quarter. In US dollar terms, total cash costs decreased by 1
percent from US$341 per ounce to US$337 per ounce. The
abovementioned production and cost improvements were offset by the
decrease in the rand gold price, resulting in operating profit
decreasing from R135 million (US$22 million) to R133 million (US$22
million) in the March quarter. Capital expenditure was marginally
lower at R37 million (US$6 million). Gold output forecast for the
June quarter will be slightly lower than the March quarter against
similar cost profiles. This is due to a slight reduction in grade
and the industrial action experienced at the start of the quarter
which had a negative influence on production. Seismic activity at
number 5 shaft complex remains a concern. However, mining
sequencing and the on-time delivery of the refrigeration plant at 5
shaft over the Christmas break are expected to improve flexibility
and future productivity levels at the complex. Kloof March 2005
December 2004 Gold produced - 000'ozs 264.4 280.6 Yield -
underground - g/t 9.7 9.2 - combined - g/t 6.7 6.8 Total cash costs
- R/kg 73,915 71,628 - US$/oz 386 364 Gold production at Kloof
decreased 6 per cent to 264,400 ounces in the March quarter. This
was partly due to a fire reported to the market on 3 February at 2
sub-vertical shaft. It was necessary to seal off this area for two
weeks, resulting in a loss of production of over 6,000 ounces.
Production has now returned to normal. The Christmas break together
with the closure of number 3 metallurgical plant during the
quarter, resulted in a further loss of gold production. This plant,
which treats surface rock dump, has proven uneconomical at the
current gold price, and its closure will reduce fixed costs at
Kloof. Clean-up of number 3 plant will commence during the June
quarter. Higher grades were experienced at 4 and 7 shafts due to
more terrace mining. The higher grades will return to slightly
lower levels in the June quarter as the mining face advances.
Operating costs decreased by 2 per cent from R649 million (US$106
million) in the December quarter to R634 million (US$107 million)
in the March quarter. Total cash costs increased by 3 per cent to
R73,915 per kilogram as a result of the lower gold production. In
US dollar terms, total cash costs increased by 6 per cent from
US$364 per ounce to US$386 per ounce as a consequence of the lower
production and the strengthening rand. Operating profit decreased
from R88 million (US$14 million) in the December quarter to R41
million (US$7 million) in the March quarter. This was due to the
lower gold price received and the decrease in gold production.
Capital expenditure decreased from R63 million (US$10 million) to
R61 million (US$10 million) for the quarter. The majority of this
expenditure was spent on 4 sub-vertical shaft. A holistic
productivity strategy is now in place and in addition, initiatives
aimed at reducing footprints thereby reducing fixed costs will
continue. An example of this is the closure of 3 plant. During the
June quarter preparation for the mothballing of the 5, 6 and 9
sub-vertical shafts will commence. These shafts are dedicated to
pumping and are not gold producing shafts. The main pumping
operation will move from 5 and 9 shafts to number 10 shaft, a
project that will take twelve months to fully commission. This
rationalisation will not only improve pumping infrastructure but
will also lower pumping costs. The Easter break and the other
public holidays in the June quarter, together with the one day
industrial action experienced at the start of this quarter, will
have a negative influence on production, particularly at 7 shaft
where an extra day of unprotected action was experienced. Not
withstanding this, gold production in the June quarter is expected
to increase which should have a positive impact on unit costs.
Beatrix March 2005 December 2004 Gold produced - 000'ozs 153.5
157.6 Yield - underground - g/t 5.2 4.7 - combined - g/t 4.8 4.5
Total cash costs - R/kg 81,064 81,351 - US$/oz 424 413 Gold
production at Beatrix decreased 3 per cent from 157,600 ounces in
the December quarter to 153,500 ounces in the March quarter.
Underground ore volumes decreased by 12 per cent from 1,016,000
tons to 897,000 tons in the March quarter. This was mainly due to
the elimination of loss making areas during the quarter, mostly at
2 shaft as mentioned last quarter. As a consequence, the combined
yield increased by 7 per cent quarter on quarter, from 4.5 grams
per ton to 4.8 grams per ton. An increased drive on dry sweepings
at all shafts also contributed to the improved yield. Surface
yields decreased from 1.3 grams per ton to 0.7 grams per ton and
treatment of uneconomical low-grade surface dumps across Beatrix at
number 1 plant and number 2 plant has ceased. Underground yields
increased from 4.7 grams per ton in the December quarter to 5.2
grams per ton in the March quarter. At Beatrix North and South,
underground yields increased from 4.5 grams per ton to 4.7 grams
per ton in the March quarter due to the elimination of low grade,
uneconomical volumes. At Beatrix West (previously named 4 shaft),
underground yield increased from 5.8 grams per ton to 7.4 grams per
ton, due to a shift in the mining mix into zone 5. However, stoping
volumes at West were 10 per cent lower quarter on quarter as the
ongoing logistical and remedial work programme was accelerated. The
majority of the ventilation system change-over and internal ore
pass work to assist mining from Zone 5 was completed during the
quarter. It is anticipated that the remaining work on the logistics
will be completed during the June quarter. The stoping and
development build-up at 3 shaft in the North section continues to
be in line with expectations. Operating costs decreased by 3 per
cent from R413 million to R402 million due to the various cost
saving initiatives. Total cash costs decreased by 1 per cent from
R81,351 per kilogram (US$413 per ounce) to R81,064 per kilogram
(US$424 per ounce). Despite the improvements during the quarter,
which resulted in an operating profit of R27 million for the month
of March, the March quarter recorded an operating loss of R8
million. The lower rand per kilogram price received was the main
contributor to this loss. This compares with a breakeven position
in the December quarter. Capital expenditure decreased from R58
million (US$10 million) to R53 million (US$9 million) in the March
quarter due to the impact of cost saving initiatives. The majority
of this expenditure was spent on development and hydropower at 3
shaft. Gold production is forecast to increase marginally in the
June quarter. Improved production at West shaft and sustained cost
control at all of the shafts should result in lower unit costs in
spite of the one day unprotected strike action experienced at the
start of the June quarter and the impact of the Easter break.
International operations Ghana Tarkwa March 2005 December 2004 Gold
produced - 000'ozs 185.0 167.9 Yield - Heap Leach - g/t 0.9 1.1
Yield - CIL Plant - g/t 1.6 1.4 Total cash costs - US$/oz 226 224
Tarkwa's gold production increased by 10 per cent from 167,900
ounces in the December quarter to 185,000 ounces in the March
quarter as forecast. The heap leach operation contributed 125,700
ounces, down 14,000 ounces from the previous quarter. The CIL plant
contributed 59,300 ounces, an increase of 31,400 ounces on the
previous quarter, reflecting the first full quarter of CIL plant
production. The CIL plant processed 1,163,000 tons at a yield of
1.6 grams per ton. The plant is operating well and has consistently
achieved or exceeded the designed throughput of 350,000 tons per
month, while exceeding the designed recovery of 96 per cent. The
head grade continues to trend towards the target of 1.8 grams per
ton. Ore stacked on the leach pads was stable at 4.1 million tons,
at a head grade of 1.16 grams per ton, compared with 1.21 grams per
ton in the December quarter. This slight decrease in grade was a
result of lower grade areas being mined and stacked at the South
leach pads as planned. The planned increase in grades at the North
leach pads, to offset the South's decrease, were not achieved
during January and February due to mining constraints in higher
grade pits. The grade is expected to return to 1.21 grams per ton
in the June quarter. The reduction in heap leach gold production
versus the previous quarter reflects lower gold-in-process release
during the period, 6,500 ounces against 11,500 ounces in December,
due to slightly lower head grades and stacking on higher lifts as
previously reported. The ongoing enhanced performance of the owner
mining fleet has resulted in record tonnages being mined this
quarter, with total tons mined increasing by 2.4 million tons to
21.1 million tons. The bulk of this increase was devoted to
increased waste mining and the stripping ratio increased from 2.84
to 3.30. While increased stripping has a detrimental impact on unit
costs, it is essential to optimise the health of the overall mine
and improve flexibility. Mining costs were US$0.73 per ton for the
quarter compared with US$0.69 per ton last quarter, reflecting an
increase in the cost of consumables and increased maintenance
requirements. The overall performance of the fleet continues to
exceed expectations, while unit costs remain within budget as
equipment efficiencies largely offset significant input cost
changes, especially on diesel. Additional opportunities to reduce
costs and improve utilization are being identified through a
continuous improvement programme. Operating costs at US$42 million
(R249 million), including gold-in-process adjustments, were US$5
million higher than the previous quarter, reflecting the increased
cost of operating the new mill for a full quarter (US$2.1 million),
and the increase in tonnages mined. Operating costs per ton treated
were US$7.90 per ton as against US$7.51 per ton in the December
quarter, reflecting the higher strip ratio. Total cash costs
remained flat at US$226 per ounce compared with the December
quarter's US$224 per ounce. This level is marginally higher than
forecast reflecting the higher strip ratio, where the mine utilised
the opportunity of the additional capacity from the fleet, and the
slightly lower grades at the south leach pads. Operating profit
increased from US$35 million (R219 million) in the previous quarter
to US$37 million (R224 million) in the March quarter due to the
increased production, offset partially by the lower gold price,
which averaged US$430 per ounce for the quarter compared with
US$437 per ounce in the December quarter. Net earnings for the
quarter increased from US$15 million to US$28 million as a result
of the increased production and a US$11 million deferred tax
release. This was due to a welcome 4.5 percentage point reduction
in the Ghanaian company taxation rate, from 32.5 to 28 per cent.
Capital expenditure halved from US$20 million (R118 million) in the
previous quarter to US$10 million (R57 million) in the March
quarter, as a result of closing-out the mining fleet acquisition
and the completion of the construction of the CIL plant. Gold
production and unit costs for the June quarter are expected to be
similar to that of the March quarter. Damang March 2005 December
2004 Gold produced - 000'ozs 53.9 66.5 Yield - g/t 1.3 1.5 Total
cash costs - US$/oz 346 226 Gold production decreased from 66,500
ounces during the December quarter to 53,900 ounces in the March
quarter. This was directly attributable to the planned cessation of
mining operations in the Damang pit, which resulted in the
replacement of 340,000 tons of high grade ore with lower grade
stockpile ore, coupled with a loss in mill run time. Mill
throughput for the quarter reduced from 1.35 million tons to 1.26
million tons at a head grade of 1.44 grams per ton, compared with a
head grade of 1.67 grams per ton in the December quarter. The
decrease of 97,000 tons milled was due to mill downtime as a result
of the failure of the SAG mill gearbox and the planned change out
of the SAG mill liners. The decrease in the head grade was due to
the replacement of the Damang pit ore with the low grade stockpile
ores. Mining commenced in the new Amoanda pit, and together with
the Juno 2SE pit was the main source of oxide feed to the plant for
the quarter. Pleasingly total tons mined increased to 3,120,000
tons from 1,913,000 tons in the previous quarter, primarily due to
the commencement of mining in the Amoanda pit, which has a
stripping ratio of 6. Ore production reduced from 809,000 tons to
468,000 tons as a result of mining operations having ceased in the
Damang pit and due to mining in the new pits focussing on waste
removal. A slight increase in ore tonnages mined is expected in the
June quarter, and significant increases in ore production is only
expected in July 2005, when the Tomento pit comes into production,
once the permitting process is completed. Operating costs,
including gold-in-process adjustments, increased to US$18 million
(R109 million) from US$15 million (R90 million) in the December
quarter. Operating costs increased as a result of higher tonnages
mined, additional grade control drilling required in the new pits
and an increase in the gold-in-process charge as a result of an
increase in stockpile ores treated. Cost per ton milled increased
from US$10.99 to US$13.27. Total cash costs increased significantly
as forecast, from US$226 per ounce in the December quarter to
US$346 per ounce in the March quarter, as a result of the above
factors and the lower head grade. With the average gold price
decreasing from US$433 per ounce to US$425 per ounce, together with
the reduced gold output and increased unit costs, operating profit
decreased from US$14 million (R86 million) to US$5 million (R27
million). Ghanaian corporate taxation reduced from 32.5 per cent to
28 per cent effective 1 January 2005. This had a small positive
impact on earnings. Capital expenditure incurred during the quarter
amounted to US$3 million (R20 million). The majority of this
expenditure was incurred in the raising of the tailings dam, the
Damang extension projects and reserve conversion drilling. Mill
throughput for the June quarter is projected at 1.3 million tons,
with gold production expected to be maintained at the level
achieved in the March quarter. Total cash costs are expected to
rise slightly due to an estimated 20 percent increase in tonnages
mined. Operations at Damang are likely to stabilise at this level
for the next year at least. Damang has outperformed expectations
consistently over the last year and the next few periods will be
more modest as lower grade sources of ore are brought to
production, pending the re-establishment of mining of higher grade
ores in the Damang pit once the large cut back is brought to full
ore production. Australia St Ives March 2005 December 2004 Gold
produced - 000'ozs 154.1 106.6 Yield - Heap Leach - g/t 0.6 0.7
Yield - Milling - g/t 3.4 4.4 Total cash costs - A$/oz 451 463 -
US$/oz 350 348 Gold production for the quarter increased 45 per
cent to 154,100 ounces, compared with 106,600 ounces in the
December quarter in line with expectation. This increase reflects
the ramp-up to full production of the new Lefroy mill, coupled with
ongoing production from the old mill during the quarter. The
contribution from the heap leach operations was slightly below the
December quarter at 10,000 ounces. Total tons processed during the
quarter amounted to 2,026,000, a significant increase from the
1,255,000 tons processed in the December quarter, with almost all
the difference attributable to the new Lefroy mill. For the quarter
1,466,000 tons were processed through the mills, compared with
689,000 tons last quarter. During this period the new mill achieved
design tonnage of 550tph. The large single stage SAG mill has
performed exceptionally well, but overall plant ramp-up was slow
and complicated by persistent materials handling problems as well
as minor process control issues. By quarter end these were well in
hand and the plant now shows potential to operate considerably
above design level. The old mill was shut down at the end of March
and decommissioning is underway. The average head grade processed
of 2.7 grams per ton was marginally below the December quarter's
2.8 grams per ton. The combined yield reduced from 2.6 grams per
ton to 2.4 grams per ton. Yield at the heap leach operation was 0.6
grams per ton compared with 0.7 grams per ton last quarter and the
yield at milling operations was 3.4 grams per ton compared with 4.4
grams per ton in the previous quarter, as more lower grade open pit
ore was milled. Mining operations produced 1.29 million tons of ore
during the quarter as planned, which was up slightly from the
previous quarter's 1.18 million tons. Open pit waste movement was
down from last quarter and will reduce somewhat again in the June
quarter, as the target ore zones become exposed. During the quarter
5.6 million tons of open pit ore and waste were mined at an average
strip ratio of 6.1 (December quarter: 8.2 million tons at a strip
ratio of 11.5). Overall the underground mining operations performed
to expectation. A reduction in ore volumes from Junction, at which
mining is scheduled to be complete in the June quarter, was mostly
offset by increased output from the Leviathan complex. Both of
these mines continue to exceed expectation offsetting ongoing
challenges at the Argo mine. Operating costs, including
gold-in-process adjustments, increased from A$48 million (R222
million) to A$72 million (R331 million) a 50 per cent increase,
which is in line with the increased production and in line with
forecast. However, total cash costs decreased from A$463 per ounce
(US$348 per ounce) to A$451 per ounce (US$350 per ounce) as a
result of lower unit processing costs associated with the new
Lefroy mill and improvements in underground mining costs. Total
cash costs in the quarter remained considerably beyond our target
of A$350 per ounce due the high costs of sustaining the old mill,
planned lower grades from the open pits and ongoing challenges in
cost control and grade recovery at the Argo underground mine.
Further cost reductions are expected in the June quarter as the new
plant is optimised and the old more expensive plant is taken off
line and further benefits from cost optimisation at the underground
mines are realised. Operating profit at A$13 million (R60 million)
improved marginally in the March quarter despite the significant
increase in gold production when compared with the previous
quarter. This was caused by two factors, the first being a A$23 per
ounce decline in gold price received, equivalent to some A$3.5
million in operating profit. Secondly, a significant gold inventory
charge in the March 2005 quarter of A$10.1 million was incurred
compared with a A$8.5 million credit in the December 2004 quarter.
These charges largely reflect the stockpiles consumed during the
quarter with the concurrent operation of the two mills, which
stockpiles had been accumulated in previous quarters. As planned
the commissioning of the new mill was also undertaken using lower
grade and thus lower margin ores, further accounting for the
disconnect between increased volumes and static operating profits.
Capital expenditure for the March quarter amounted to A$15 million
(R72 million) compared with A$32 million (R148 million) in the
December quarter. This decrease was driven by a reduction in mill
construction cost (A$12 million), which is now complete, and a
reduction in open pit waste stripping (A$3 million). Production for
the June quarter is expected to be in line with the March quarter,
as increased production from the new Lefroy mill and clean-up and
recovery of gold from the decommissioned old mill will mostly
offset the lost production from the old mill. Timing and volumes of
gold recovery from the old mill are however unpredictable. Unit
costs are expected to improve over the next two quarters as the
Lefroy mill is optimised and key ore zones are accessed in the open
pit operations. Agnew March 2005 December 2004 Gold produced -
000'ozs 52.8 49.0 Yield - g/t 5.6 5.4 Total cash costs - A$/oz 300
351 - US$/oz 233 264 Gold produced at Agnew increased from 49,000
ounces in the December quarter to 52,800 ounces in the March
quarter, slightly ahead of the forecast. This was primarily due to
a 5 per cent increase in mill throughput and a 3 per cent increase
in feed grade. The increase in feed grade was due to an increase in
the grade from the Songvang pit and the Kim underground mine. Gold
production from the Waroonga underground complex (Kim and Main
Lodes) increased to 42,000 ounces from 35,000 ounces in the
December quarter. This was due to the ongoing enhanced performance
of the Kim Lode, offsetting the production previously sourced from
the Crusader complex, which was shutdown in the December 2004
quarter. The development of Main Lode and Kim South Lode commenced
during the quarter, and stope production from these sources will be
fully operational by the end of the September 2005 quarter. Kim
South is a down dip, but offset and upthrown extension of the Kim
Lode, that was discovered in the latter part of last year. Open pit
mining at Songvang ramped-up to capacity during the quarter.
Although this phase of mining is predominantly waste stripping, ore
production accounted for 11,000 ounces of the quarter's gold
production. Operating costs, including gold-in-process adjustments,
decreased from A$17 million (R80 million) to A$16 million (R74
million) in the March quarter, mainly as a result of the cessation
of operations at the underground Crusader complex. Total cash costs
decreased from A$351 per ounce (US$264 per ounce) in the December
quarter to A$300 per ounce (US$233 per ounce) in the March quarter.
This decrease was a result of the increase in gold production and
grades, and the decrease in underground mining costs. Agnew's
operating profit increased from A$11 million (R49 million) to A$13
million (R60 million) in the March quarter. This is primarily due
to lower mining costs and the higher grades referred to above.
Capital expenditure increased from A$11 million (R50 million) to
A$17 million (R80 million) in the December quarter. This increase
is predominantly a result of increased waste stripping at the
Songvang open pit and increased development at the Waroonga
underground complex. Gold production for the June quarter is
expected to be slightly higher than the March quarter, reflecting
higher mill throughput and increased ore production from the
Songvang pit. Cash costs should remain stable. Quarter ended 31
March 2005 compared with quarter ended 31 March 2004 Attributable
gold production increased 5 per cent from 1,033,000 ounces for the
March 2004 quarter to 1,088,000 ounces this quarter. At the South
African operations production increased 2 per cent due to an
increase in yield from 7.4 to 7.9 grams per ton, in line with the
strategy to reduce marginal mining. At the international operations
production increased 11 per cent. This was mainly due to the
increases achieved at St Ives and Tarkwa from the commissioning of
the new growth projects during the year. Revenue decreased 3 per
cent in rand terms (increased 11 per cent in US dollar terms) from
R3,028 million (US$444 million) to R2,950 million (US$495 million).
This was due to a reduction in the rand gold price achieved, from
R88,887 per kilogram (US$407 per ounce) in the March 2004 quarter
to R81,952 per kilogram (US$428 per ounce) in the March 2005
quarter, which offset the increase in production. Operating costs
were unchanged at R2,351 million (in dollar terms increased from
US$345 million to US$395 million) due to cost saving initiatives
and the impact of translating costs at the international operations
into South African rand at a stronger rand dollar exchange rate
than the corresponding quarter in the previous year. The rate
strengthened from US$1 = R6.79 to US$1 = R5.95, a 12 per cent
increase. At the South African operations costs were virtually
unchanged at R1,649 million despite above inflation wage increases
and despite the 2 per cent increase in production referred to
above. This was due to the cost saving initiatives implemented over
this period. Operating profit declined from R656 million (US$95
million) to R537 million (US$90 million) quarter on quarter.
Earnings excluding gains and losses on financial instruments and
foreign debt and exceptional items amounted to R128 million (US$21
million) this quarter compared with R238 million (US$34 million) in
the March 2004 quarter. Capital and development projects Damang pit
cut back project Initial pit designs have been completed on the ore
resource model, developed after the recent drilling campaign in and
around the existing pit. The pit design is indicating that a
cutback is feasible on both the Eastern and Western walls of the
pit. Additional infill drilling was commissioned and completed
during the quarter. This was to confirm the extent of the
mineralisation in certain areas of the proposed cutback, as well as
to convert inferred resources within the designed pit into a higher
category. Currently a geotechnical study is being undertaken by SRK
Perth to examine the influence that the Eastern tailing storage
facility will have on the proposed Eastern wall cutback and the
Damang fault on the Western wall cutback. Once the geotechnical
parameters have been established a final economic evaluation will
be completed during the June quarter. Cerro Corona in Peru All
field work necessary for the completion of the Environmental Impact
Study (EIS) was completed during the March quarter. This includes
all of the necessary social base line studies which are an integral
part of the EIS. Submittal of this document is scheduled by the end
of April, reflecting the additional social work requested by the
Peruvian Government. Community relations are of significant
importance and as such six workshops presenting the project to the
various nearby communities were completed during the quarter with
positive results. Hatch has been selected as the prime contractor
for the engineering and final design work, and were well advanced
in this effort by quarter's end. It is still planned to have the
project engineering completed to advanced feasibility level by the
end of the June quarter. A preferred mining contractor for the
project has been identified and finalisation of terms is underway.
Arctic platinum project In October we reported that the feasibility
study of this project had been temporarily delayed pending the
outcome of a review to assess the impacts of lower grades in the
most recent Suhanko resource models and the impacts of the dramatic
increases in input costs on the back of the global commodity and
resources boom, and the strong euro : US dollar exchange rate.
During the quarter the feasibility study was completed and it has
been determined that, at this stage, we will not be proceeding with
the development of the large scale Suhanko Project, which was the
basis of the feasibility study. This project had envisaged the
development of a 10mtpa open pit and on site concentrator
operation, exploiting the Konttijarvi and Ahmavaara deposits. A
number of factors have converged to reverse the economics of this
project to the point where it is not attractive to develop in the
current economic environment. The most significant factors include:
* A revision in the expected head grade to below 1.9 grams per ton
2PGE+Au against previous estimates in excess of 2 grams per ton.
This revision follows extensive exploration and modelling over the
last year. A significant increase in the capital expenditure
required to bring this project to production. Previous estimates
had placed the development capital slightly over euro300 million
(and US$300 million) at a 1:1 euro : US dollar exchange rate. The
latest estimate has placed this figure at some euro420 million but
more importantly in excess of US$500 million. This reflects the
appreciation of the euro, the currency in which the majority of the
capital would be incurred, while the revenue stream would be driven
in US dollars. Moreover the quantum of capital has been adversely
affected by a dramatic increase in input costs, driven by higher
commodity prices such as fuel, steel and copper, repricing of
equipment and rapid escalation in the cost of services required to
execute such projects. The advanced EIA process had also led to
growth in costs associated with environmental protection. * The
global move in the base metal smelter markets further contributed
to the poor near term outlook for this project. As previously
reported this project was reliant on custom smelting. As the
concentrate market has moved back in favour of smelters over the
last year, we have seen a reduction in the level of commercial
interest in the Arctic concentrates, reflected in poorer smelting
terms being offered, than seen in the initial stages of the study
and up until mid 2004. * The short-term outlook for the palladium
market, which metal would contribute some 35 to 40 per cent of this
project's revenue, remains poor. In particular the lack of
significant substitution from platinum back to palladium in petrol
autocatalysis despite the ongoing pressure on platinum supply is
cause for concern. The metal's inability to recover above US$200
per ounce reflects this weakness. This poor price performance is
particularly concerning in the light of the persistent weakness of
the US dollar not being reflected in the palladium price,
suggesting that the medium term price outlook is not robust. At
this time geological work is being completed that will finalise our
understanding of the higher grade potential in these deposits that
has been reported previously. While this work is not yet complete,
it is not anticipated that it will materially change the outlook
for the development of these deposits on a large scale. Work is
also ongoing to assess the viability of a smaller scale, and higher
margin starter project at Suhanko. Discussions are also being held
with a small number of companies that have expressed an interest in
participating in the development of this project. Permitting is
planned to be completed by July 2005, along with outstanding land
purchases within the mining lease application area. Unless a
significant opportunity is identified in a smaller scale, high
margin project or a compelling deal is offered by a third party,
Gold Fields is intent on holding this project for development at
some stage in the future, when a number of the economic drivers
referred to above have moved back in favour of the project. APP
represents a significant field of PGM discoveries and it remains
our strategy to secure and develop world class resources, albeit at
appropriate timing in the global metal and currency cycles. Gold
Fields has invested approximately US$90 million in this project to
the end of March 2005 Exploration and corporate development Gold
Fields continued its exploration programme with drilling on five
projects during the quarter. At the Essakan project in Burkina
Faso, Gold Fields, together with joint venture (JV) partner Orezone
Resources Inc., continued to drill the Essakan Main Zone as part of
the planned pre-feasibility study forecast to be completed during
calendar 2005. An in-house team of specialists were organized
during the quarter and environmental, social, engineering and
resource work has begun. An in-house resource estimate was
completed during the quarter at the Mampehia prospect on the 100
per cent Gold Fields owned Bibiani project in Ghana. Although very
prospective and not fully tested, Gold Fields has determined that
the project does not represent a stand-alone opportunity and we
have begun a formal exercise to realise value from this project.
Results have been received at the 80 per cent owned Kisenge
prospect in the southern DRC, resulting in the recognition of a
target requiring further work at Mpokoto. At the Tembo project in
Tanzania, Gold Fields has decided not to exercise its JV option on
the project. Additional air core drilling at the Central Victoria
project in Australia has confirmed a 3.2 kilometre gold in bedrock
anomaly on the Gold Fields 100 per cent owned Lockington tenement.
The first bedrock drill test of this target will take place later
this year. In China, work continued on the Fujian JV with Zijin
Mining and on the Shandong JV with Sino Gold. Gold Fields completed
a private placement for C$24 million in Comaplex Minerals Corp.
(TSX: "CMF") bringing its interest to 19.8 per cent. The full
purchase price of this investment is included in the cash flow.
Comaplex is a Canadian company developing the Meliadine project in
the Nunavut province. Gold Fields will provide technical assistance
to Comaplex during the upcoming summer field programme. In early
April, Gold Fields sold its interest in the Angelina project in
Chile to JV partner Meridian for US$7.5 million plus a 2 per cent
NSR on the majority of lands within the JV. This will be accounted
for in the June quarter. At the El Callao project, a 50:50 JV with
Bolivar Gold in Venezuela, RC drilling continued during the
quarter. Legal A class action lawsuit was filed by Zalumzi
Singleton Mtwesi against Gold Fields Limited in the State of New
York on 6 May 2003. A further lawsuit was filed in a federal
district court in New York by six individuals against Gold Fields
and a number of other defendants on 9 July 2004. These lawsuits
allege human rights violations arising from the apartheid era. In
both cases, the plaintiffs have failed to effect service of the
complaint within the time permitted under applicable law. In the
event the complaints are re-filed and process is timely effected,
Gold Fields will seek their dismissal on numerous grounds,
including failure to state a claim in accordance with the holding
of the US Supreme Court in Sosa v. Alvarez-Machain. Harmony's
hostile offer The Board believes that the Harmony offer does not
represent a fair value for Gold Fields; takes no account of the
high quality of Gold Fields' asset base; does not reflect the
benefits that successful international diversification has brought
to Gold Fields' shareholders; and does not reflect the troubled
financial and operational condition of Harmony, nor the positive
operating trend that Gold Fields is experiencing. Shareholders are
advised that the Board of Gold Fields continues to oppose Harmony's
hostile offer vigorously, as the Board believes: * The hostile
offer grossly undervalues Gold Fields; consists solely of Harmony's
equity with no cash element; and offers no control premium to Gold
Fields' shareholders; * Harmony appear to have had great difficulty
in completing their competent persons report (CPR), which has still
not been published. The publication of this report is needed to
provide clarity on conflicting mineral reserves announcements made
by Harmony since the commencement of its hostile offer on 18
October 2004. Delivery of this document was promised by December
2004 in Harmony's offer document to the Gold Fields shareholders.
On 23 March 2004, the Securities Regulation Panel urged Harmony to
release the CPR as a matter of urgency. * Harmony's management
model, the so-called "Harmony Way", is flawed and unsuited for the
challenges presented by Gold Fields' complex, long-life and deep
level South African mining operations; * Harmony does not appear to
have the vision, management depth, or skills and capabilities to
manage a global mining company, as they have effectively
demonstrated through their poor track record of international
expansion over the past decade; * Harmony's financial position is
increasingly troubled, as is evidenced by further ongoing
significant consumption of cash by the Harmony operations. The Gold
Fields Board believes that this is seriously impairing Harmony's
balance sheet and will threaten the viability of any combined
entity. At the current rand gold price over half of Harmony's
production is making operating losses; * Whilst a combination of
the two companies would make the world's largest gold mining group,
the losses incurred by Harmony are of such a magnitude that the
Gold Fields profits would be eaten up, thus creating the world's
largest loss making gold company; and * An independent Gold Fields
offers shareholders a solid and transparent investment vehicle with
more exciting growth prospects than the combination proposed by
Harmony. On 7 April 2005, Gold Fields issued an application out of
the High Court citing Harmony, as well as the Securities Regulation
Panel. Gold Fields claims that the Harmony offer to acquire all of
the Gold Fields shares and to merge the two entities lapsed on 18
December 2004 and is incapable of revival. The effect of the
lapsing of the offer is that any acceptances by shareholders
subsequent to 18 December 2005 have simultaneously lapsed and the
offer is now a nullity. It is expected that this application will
be heard within the next 3 weeks. Harmony has refused, pending the
hearing of the above application and should it receive Competition
Authority approval, to undertake not to implement the offer. Gold
Fields has, on 26 April 2005, brought a further application in
which it will ask the Court to interdict any implementation of the
Harmony offer pending final resolution of the above main
application. The interdict application will be heard on 3 May 2005.
The public hearings before the South African Competition Tribunal
on Harmony's hostile offer to acquire 100 per cent of the issued
share capital of Gold Fields ("the proposed merger") is set down
for 3 to 6 May 2005. The Tribunal will adjudicate whether or not
the proposed merger should be approved in terms of the South
African Competition Act. Gold Fields is contending that the
proposed merger should be prohibited on the grounds that it will
have a materially adverse effect on competition particularly the
supply side, and that it will have extremely negative public
interest consequences. The public interest grounds include an
adverse effect on employment, communities and the mining sector.
The Board recommends that Gold Fields' shareholders and ADR holders
should continue to reject the Harmony offer, should not tender
their shares or ADRs, and should continue to reap the benefits of a
well managed, performance focused, internationally diversified
South African champion -- Gold Fields. The directors of Gold Fields
accept responsibility for the information contained in the
paragraphs above headed "Harmony's hostile offer" and state that to
the best of their knowledge and belief (having taken all reasonable
care to ensure that such is the case) the information contained
therein is in accordance with the facts and does not omit anything
likely to affect the import of such information. Outlook Gold
production should increase marginally in the June quarter with a
similar improvement in unit costs. Basis of accounting The
unaudited results for the quarter have been prepared on the
International Financial Reporting Standards (IFRS) basis. The
detailed financial, operational and development results for the
March 2005 quarter are submitted in this report. These consolidated
quarterly statements are prepared in accordance with IAS 34,
Interim Financial Reporting. The accounting policies used in the
preparation of this report are consistent with those applied at the
previous year-end. I.D. Cockerill Chief Executive Officer 28 April
2005 FIRST ADD -- TABULAR MATERIAL I -- TO FOLLOW DATASOURCE: Gold
Fields Limited CONTACT: Investor relations: South Africa: Willie
Jacobsz, Telephone:(+27)(11)644-2460, Facsimile:(+27)(11)484-0639,
e- mail:; Nerina Bodasing, Telephone:(+27)(11)-644-2630,
Facsimile:(+27)(11)-484-0639, e-mail: ; North America: Cheryl A
Martin, Telephone:(+1)(303)-796-8683, Facsimile:(+1)(303)-
796-8293, e-mail: ; Transfer Secretaries: South Africa:
Computershare Investor Services 2004 (Proprietary) Limited, Ground
Floor, 70 Marshall Street, Johannesburg, 2001, P O Box 61051,
Marshalltown, 2107, Telephone:(+27)(11)-370-5000,
Facsimile:(+27)(11)-370-5271; United Kingdom: Capital Registrars,
Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU , England
, Telephone:(+44)(20)-8639-2000, Facsimile:(+44)(20)-8658-3430;
Corporate Secretary Cain Farrel, Telephone:(+27)(11)-644-2525,
Facsimile:(+27)(11)-484-0626, e-mail: ; Registered offices:
Johannesburg: Gold Fields Limited, 24 St Andrews Road, Parktown,
Johannesburg, 2193, Postnet Suite 252 , Private Bag x 30500,
Houghton 2041, Tel: (+27)(11)-644-2400, Fax: (+27)(11)-484-0626;
London: St James 's Corporate Services Limited, 6 St James 's
Place, London SW1A 1NP, United Kingdom,
Telephone:(+44)(20)-7499-3916, Facsimile:(+44)(20)-7491-1989:
American Depository Receipts Transfer Agent: Bank of New York,
Shareholder Relations, P O Box 11258, New York, NY20286 -1258,US
toll-free telephone: (+1)(888)-269-2377, e-mail: Web site:
http://www.goldfields.co.za/ http://www.gold-fields.com/
Copyright